Credit Card: Credit cards have a different importance in the growing world of digital payments. Due to all the facilities, the use of credit cards is increasing continuously. Many people hold multiple credit cards. On the basis of credit card, you can buy goods even without money. Anyone can make payments and collect bills etc. The biggest advantage of a credit card is that you get up to 50 days to pay the bills and that too without any additional charges or interest.
The benefits of a credit card are many, but due to a little carelessness, it can prove to be a trap for you. If you do not pay the credit card bill on time, you have to pay more interest.
Credit Card Billing Cycle
To avail credit card, it is important to understand the billing cycle of the credit card. Once you understand the billing cycle of the card, you will be able to use it to your advantage. Billing cycle is the period for which the credit card bill is generated.
If your credit card statement is generated on the 10th of every month, the billing cycle will start from the 11th of the previous month and will continue till the 10th of the current month. You should check with the bank what is the actual duration of the billing cycle. Because the billing cycle period is between 27 days to 31 days.
Credit card statement or billing statement provides information on how you have used the credit card during the billing cycle or billing period. The statement contains information about the transactions done during your billing cycle, minimum amount due, amount due, due date etc.
There is an opportunity for credit card payment till three days after the due date of payment. Even after this, if you do not make the payment, then late payment is charged. This charge is very high and this charge is included in the next bill.
Credit Card Bill Payment
While paying the credit card bill, you see three options. First – payment of total bill, second – minimum amount and third – under amount.
The law says that the credit card bill should always be paid within time. This improves your credit score, you do not have to pay extra interest and the biggest advantage is staying away from tension. If you are not able to pay the entire credit card bill due to any reason, then you must pay the minimum amount.
You can avoid fines by making the minimum payment. The minimum amount is 5 percent of the total bill. In this the monthly installment payment is different. If the EMI of any of your goods is Rs 2000 and you have done any shopping worth Rs 5000 during this period, then you will have to pay a minimum of Rs 5200.
However, the EMI amount will be additional. For example, if the EMI of a phone is Rs 5000 every month and you have shopped for 10 thousand in that month, then the minimum amount will be Rs 5500 (5000 + 500).
Loss of delay in payment
Once the credit card bill is generated, you get three weeks to make the payment. If you make the minimum payment, you will not get the benefit of the free interest period. You will not get the interest free period until the full payment is made. After that every payment will attract monthly interest.
You will have to pay the interest as applicable till you make the full payment. In this way, you can avoid penalty and late payment charges by paying the minimum amount.
In the credit card statement, you will see the status of the reward points accumulated so far. Here you will see a table showing the number of reward points earned from the previous cycle, points earned in the current billing cycle and points that have expired.